November 5, 2015 1:58 PM
The office of the U.S. Trade Representative (USTR) has released the complete text of the Trans-Pacific Partnership Agreement (TPP) – a huge trade pact among 12 countries bordering the Pacific Ocean. The agreement is also a big deal in its volume, with 30 chapters, four annexes, 55 “related instruments,” and two bilateral non-tariff agreements with Japan. According to the New Zealand trade minister, when New Zealand released the text earlier, “the large number of documents released today amount to over 6,000 pages of text and market access schedules.”
The Parties to the TPP are a mix of large, developed economies and smaller emerging markets: United States, Canada, Mexico, Peru, Chile, Malaysia, Vietnam, Japan, Singapore, New Zealand, Australia, and Brunei.
October 28, 2015 6:22 PM
The House has passed Rep. Stephen Fincher’s Ex-Im revival bill, by the margin of 313-118. Senate Majority Leader Mitch McConnell has publicly said the Senate will not act on the bill, so last night’s vote was more of a public statement than anything else. While the statement might be unpleasant, the public now has a much better idea of which Congressmen are pro-business, as opposed to pro-market—an important distinction. So at the very least, voters now have a better idea of who to hold accountable, and who they might support in primary elections.
With no stand-alone vote, Ex-Im reauthorization will instead be folded into an upcoming must-pass transportation bill. A Senate vote on that could happen as soon as next week.
Both parties share blame for Ex-Im’s possible revival. Nearly all Democrats voted in favor of reviving Ex-Im—a curious reversal of decades-long opposition. Rep. Alan Grayson (D-Fla.) is the only one to stay consistent. Progressives have been Ex-Im’s traditional opponents, not just on corporate welfare grounds, but on human rights grounds—Ex-Im subsidizes many governments with checkered human rights records, and helps to keep them in power. See for example, this Mother Jones article from 1981, this one from 1992, and another from as recently as 2011, which is based on environmental grounds.
The GOP’s small pro-market wing began actively opposing Ex-Im in 2012, so Mother Jones therefore changed its stance around that time; see here and here. See also a thoughtful piece at Salon on this curious role reversal.
October 27, 2015 12:53 PM
Last night the House of Representatives voted on a rare discharge petition, under which a controversial bill can skip the usual committee process and go straight to a floor vote. In this case, the discharged bill is Rep. Stephen Fincher’s Export-Import Bank revival bill. It passed, 246-177, with 62 Republicans joining nearly all Democrats. It was the first successful discharge petition since the McCain-Feingold campaign finance regulation bill. For more on discharge petitions, see my earlier post.
So what happens now? On Tuesday, the House will hold further procedural votes on the Ex-Im bill, which will almost certainly pass. Then it’s off to the Senate, which is unlikely to act on the bill.
October 13, 2015 3:58 PM
One of the classic lines from the 1990 novel and 1993 movie Jurassic Park is that “life finds a way.” As with dinosaurs, so with government programs. The Export-Import Bank expired on June 30, and has been in liquidation ever since. But Ex-Im’s supporters may have found a way to bring it back to life. Just as frog DNA implanted in Jurassic Park’s all-female cloned dinosaurs allowed them to reproduce by causing some of them to switch genders, Rep. Stephen Fincher (R-Tenn.), who once opposed Ex-Im, has found a way to get Ex-Im past its own obstacles in the House: a discharge petition.
In the House of Representatives, a bill must typically be approved by a Committee before it moves to a full floor vote before all 435 members. A successful discharge petition circumvents Committees and brings a bill straight to a floor vote, but it is rarely used. The last time a discharge petition succeeded was in 2002—ironically, in Fincher’s case, for the McCain-Feingold campaign finance regulation bill.
Fincher’s re-election campaign has received about 150 donations totaling a little more than $250,000, as of the most recent campaign finance disclosures. Two of those donations come from his home state of Tennessee, totaling $750. As journalist Tim Carney puts it, this “rounds to 0 percent of his money raised.” In total, “More than 99 percent of the money powering Fincher's re-election bid comes from political action committees (almost all of them corporate PACs) and K Street lobbyist types.” Among those corporate PACs are all of Ex-Im’s biggest beneficiaries, including Boeing, General Electric, and other large firms.
October 7, 2015 1:32 PM
Trade ministers of 12 Asia-Pacific countries announced October 5, 2015, that they had completed negotiations on the Trans-Pacific Partnership Agreement (TPP). The TPP links together the U.S., Canada, Mexico, Australia, New Zealand, Japan, Chile, Peru, Malaysia, Singapore, Vietnam, and Brunei in a broad trade agreement among countries that represent about 40 percent of the world’s GDP. The trade pact includes 30 chapters dealing with traditional trade issues such as market access and tariffs, while significantly expanding the purview of trade agreements with chapters focusing on such issues as labor, the environment, intellectual property, electronic commerce, and others.
As summarized on the U.S. Trade Representative’s website and elsewhere, the agreement does provide some definite positives: It eliminates or reduces tariffs on a broad range of industrial and agricultural goods; it takes steps to open up the Canadian and Japanese dairy markets to more imports; it allows more sugar to be imported into the U.S. to help sweetener users meet demands stifled by the U.S. sugar program; it phases out over a very long period U.S. tariffs on Japanese autos and makes inroads into Japan’s non-tariff restrictions on U.S. auto imports; it addresses other non-tariff trade barriers by affirming that restrictions on imports in the name of safety or environmental harm have to be based on science; it streamlines customs procedures for more timely deliveries.
What’s unique about TPP, among many issues, is the fact that labor and environment disputes among the parties are subject to the same dispute settlement procedures as commercial disputes. Subjecting commitments in the Labor and Environment chapters to dispute settlement—the same enforceability mechanism available for other chapters of the TPP Agreement—including the availability of trade sanctions. Subjecting commitments in the Labor and Environment chapters to dispute settlement—the same enforceability mechanism available for other chapters of the TPP Agreement—including the availability of trade sanctions.Subjecting commitments in the Labor and Environment chapters to dispute settlement—the same enforceability mechanism available for other chapters of the TPP Agreement—including the availability of trade sanctions.Thus, these non-trade issues are raised to the level of traditional trade issues, which marks a new incursion into using trade as a vehicle for special interests.
September 25, 2015 11:22 AM
The World Bank is considering changing its definition of what constitutes extreme poverty, raising the level below which someone is treated as extremely poor from $1.25 a day to $1.90 a day. This comes after a long trend of people moving out of the category, leading some to point out that the Bank may have an interest in maintaining high numbers of people defined as poor.
September 24, 2015 10:57 AM
OPIC is the Overseas Private Investment Corporation. It is a federal agency that offers financing for international projects by U.S. companies. Intended mainly as an economic development tool for developing countries, OPIC is also a way to give assistance to U.S. companies, and serves as a foreign policy tool for the federal government. In recent years, OPIC has also been captured by renewable energy interests, who now receive roughly 40 percent of its business.
September 18, 2015 6:31 AM
Earlier this week, I wrote that GE is moving 500 jobs overseas as a direct result of the Export-Import Bank’s expiration. A correction is in order—from GE, not from me.
As it turns out, 400 of those jobs did not exist in the first place. Multiple sources confirm this.
The Washington Post’s Catherine Ho:
Those 400 jobs do not currently exist, but that is the number of jobs GE would create in France if it wins pending deals that Coface has agreed to help finance.
The Heritage Foundation’s Diane Katz:
Contrary to the hyper headlines, the 400 jobs that Greenville supposedly will “lose” don’t even exist.
The Mercatus Center at George Mason University’s Veronique de Rugy:
G.E. doesn’t always make such noise about “moving jobs abroad.” After all, it already has a large workforce overseas. Should Americans be upset about those jobs, too?
In particular, Veronique’s entire post is worth reading, and makes several other important points. As for the 100 jobs that apparently are moving overseas: rather than one sixth of one percent of GE’s workforce moving overseas, the corrected figure is closer to one thirtieth of one percent. One might as well put a GE logo next to the dictionary definition of “hyperbole.”
September 16, 2015 12:53 PM
General Electric recently announced it would not move its headquarters to Cincinnati. The reason for this earth-shattering news is that some members of Ohio’s congressional delegation oppose reauthorizing the Export-Import Bank. GE is a major beneficiary of Ex-Im financing.
The announcement costs GE nothing to make, as the top contenders for relocation apparently include New York and Georgia. It expects to reach a decision by year’s end. GE, currently headquartered in Connecticut, is mulling a move as it sells off most of GE Capital, its financing arm. Connecticut’s high taxes and unfavorable business climate are also factors in GE’s relocation decision, though apparently GE only pays the state minimum in corporate tax--$250 (GE and its employees pay plenty of other taxes, though). Most of GE’s Connecticut employees work for GE Capital, whereas most of its other operations are elsewhere—including, ironically, Ohio.
GE also announced that, because of Ex-Im’s uncertain future, it is moving 500 jobs overseas. Then again, this isn’t exactly big news, either. GE has roughly 307,000 employees, so this is equivalent to about one sixth of one percent of its workforce. GE’s natural turnover from retirements, hirings, and firings is orders of magnitude higher. Also worth pointing out: about 55 percent of GE’s employees are already overseas.
September 11, 2015 2:39 PM
A new report commissioned by the International Alliance for Electronic Payments, of which CEI is a member, finds that the Reserve Bank of Australia misunderstood the economics when it first moved to cap interchange fees on electronic card payment systems. That cap was mimicked in the U.S. via the Durbin Amendment in the Dodd-Frank Act and more recently when the European Union decided to impose its own caps.
The new report, written by Professors Sinclair Davidson and Jason Potts of RMIT University, finds that the Reserve Bank mistook an efficient, interdependent system for a monopoly. They write:
In short, the Reserve Bank of Australia engaged in an extensive regulatory intervention based on poor theory, and no empirical evidence. Theory has not provided an unambiguous indication of market failure, and there is no empirical evidence to support the notion of monopoly pricing – other than a vague notion that interchange fees were “excessive”. What the Reserve Bank identified as being “externality” any fair minded observer would label “gains from trade”.
We argue that interchange fees are the outcome of an efficient bargaining process given that banks and consumers, and banks and merchants form long term relationships with each other. For as long as there is competition in the banking sector and competition in the retail sector, the interchange fee itself is subject to competitive pressure.
They also conclude that Australian consumers are likely to be worse off as a result of the regulation. That conclusion is echoed in the empirical research into the effects of the Durbin Amendment in the U.S., with several studies suggesting significant impacts on consumer welfare.